If you are an on-demand worker or Wonolo 1099 freelancer, then this is the post for you.
Doing your own taxes is a stressful process that most people would prefer to avoid. However, this year you can feel a little less stressed knowing that this guide will help you. The great thing about being a freelancer with Wonolo is the tax benefits- you have all of the freedom with a ton of 1099 benefits!
In this quick n' easy guide, we'll take care of everything you need to know from start to finish. No more worrying about paying quarterly taxes or tax deductions - just read here.
Note: If you want to breeze through your Wonolo taxes and maximize your tax savings, try Bonsai Tax. Our app can remind you of filing deadlines, estimate taxes, and scan your bank/credit card statements for tax deductions. Claim your free trial for 14-days here.
Wonoloers are considered their own self-employed business. This means you are responsible for paying all of your taxes. It is your duty to understand what taxes you'll need to pay. Let's dive into the different kinds you'll owe Uncle Sam at the end of the year.
Independent contractors for Wonolo need to pay self-employment tax or Social Security and Medicare taxes on the income they earn from freelancing. Self-employment tax is composed of 12.4% for Social Security and 2.9% for Medicare. It is important to calculate your self-employment tax rate so you know how much money to set aside at the end of the year. Late in this article, we'll go over an easy way to claim deductions and lower that tax bill.
Even if you are not a freelancer, you need to file income taxes. In fact, anyone earning money needs to report their income to the IRS. Income taxes vary based on your tax bracket. Check the updated IRS tax bracket here.
If you contracted as a Wonoloer, you'll most likely receive a 1099-NEC in the mail. The requirement to receive a 1099-NEC is if you were paid more than $600 by a business. You won't receive a 1099 under $600 but you may still have to pay taxes.
As a Wonoloer, you'll need to file estimated tax payments four times a year. Estimated taxes were designed to help self-employed folks ease the burden of paying one large sum at the end of the year. Instead, they will make an estimated payment to the IRS four times a year.
Here are the due dates for estimated taxes:
There is a lot of available tax deductions for Wonolo freelancers. Here is a list of common write-offs:
Remember, you cannot deduct personal costs for write-offs. Only the business-specific portion of these expenses. You'll file these deductions on your Schedule C.
Note: If you would like software to scan your bank/credit card statements, organize and track your tax deductions, try Bonsai Tax. Users save on average $5,600 from their tax bill by using our software. Try a 14-day free trial here.
Whether you’re a freelancer or an entrepreneur, taxes are always something to be concerned about. As if the looming deadline isn’t enough of a stressor for you, there are also various tax forms that need to be filed! And it can all seem so complicated. That is why we created Bonsai Tax - our goal is to simplify your life by providing simple and efficient 1099 services without breaking your bank account in the process. Claim your 14-day free trial today.
It is appropriate you always seek professional advice from an accountant or tax expert. This guide is not meant to be viewed as tax accounting, legal or financial advice. Please speak with a tax, financial or other professional if you have any questions or concerns.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?